Volkswagen Official Gets 7-Year Term in Diesel-Emissions Cheating

Oliver Schmidt, a Volkswagen
executive, speaking at an industry event in Michigan in 2014. He had
been with the company for two decades when he was arrested in a scheme
to deceive regulators.Credit
Joe Wilssens, via European Pressphoto Agency

A top Volkswagen official in the United States was sentenced on Wednesday to seven years in prison for his role in the German automaker’s decade-long scheme to cheat on diesel emissions tests.

The sentencing of Oliver Schmidt, a former Volkswagen manager in Michigan, was the latest turn in a vast scandal that has tarnished the company’s reputation and has cost the carmaker more than $20 billion in fines and settlements.

The sentence, including a fine of $400,000, was imposed by Judge Sean F. Cox in Federal District Court in Detroit four months after Mr. Schmidt, 48, pleaded guilty to conspiracy to defraud the federal government and to violating the Clean Air Act. The sentence was in line with the prosecution’s recommendation.

Mr. Schmidt, a citizen of Germany, is the highest-ranking Volkswagen employee to be convicted in the scheme in the United States. His case underscores the Justice Department’s commitment to indicting and prosecuting participants in the company’s efforts to rig pollution tests on hundreds of thousands of diesel vehicles imported for sale in the American market.

But most of those suspected of conspiring to defraud United States regulators are out of reach of American justice in Germany, which normally does not extradite its own citizens. Mr. Schmidt may turn out to suffer the harshest punishment for the emissions fraud even though he was hardly the only participant or the highest ranking.

Mr. Schmidt’s arrest in January, more than a year after the scandal erupted, was something of a fluke. Having been transferred back to Germany, he came to the United States for a vacation with his wife and was seized as he waited for a departing flight in Miami. Why he risked arrest by traveling to the United States remains a mystery.

Mr. Schmidt had been a Volkswagen employee since 1997 and was named general manager of the company’s engineering and environmental office in Auburn Hills, Mich., in 2013. He was responsible for the automaker’s relations with the federal and California regulatory agencies that initially pursued the emissions-cheating case.

Before imposing the sentence, Judge Cox admonished Mr. Schmidt for his actions and described him as a crucial figure in a wide-ranging plot. “You are a key conspirator responsible for the cover-up in the United States of a massive fraud perpetuated on the American consumer,” the judge said at the end of the nearly two-hour hearing.

Prosecutors asserted that Mr. Schmidt had provided false information to federal agents after the Environmental Protection Agency uncovered the “defeat devices” that Volkswagen used to circumvent pollution rules.

Judge Cox said Mr. Schmidt’s effort to conceal the existence of the devices from regulators was hardly an isolated mistake. “You viewed the cover-up as an opportunity to shine and climb up the corporate ladder,” the judge said.

Mr. Schmidt has played down his role in the development of the devices and in the company’s efforts to cover up its actions.

In his comments to the judge, Mr. Schmidt — his wrists shackled and wearing a red prison jumpsuit and black-rimmed reading glasses — said he accepted responsibility for his wrongdoing. “I only have to blame myself,” he said in German-accented English. “I made bad decisions, and for that I am sorry.”

Mr. Schmidt had sought to limit his sentence to 40 months in prison and a $100,000 fine.

In a letter to the judge before the sentencing, Mr. Schmidt said his loyalty to Volkswagen had led him to be “misused by my own company.” He cited a meeting in 2015 with a senior official at the California Air Resources Board at which he concealed the existence of software that allowed Volkswagen to cheat on emission tests.

“A script, or talking points, I was directed to follow for that meeting was approved by management level supervisors at VW, including a high-ranking in-house lawyer, ” he said in the letter. “Regrettably, I agreed to follow it.”

Mr. Schmidt did not identify any Volkswagen superiors who might have pressured him to lie to regulators.

Volkswagen moved to put the scandal behind it in the United States by agreeing this year to plead guilty to felony charges of illegally importing nearly 600,000 vehicles equipped with devices to circumvent emissions standards. It paid $4.3 billion in penalties and was put on probation for three years, with a monitor overseeing its compliance with ethics and regulatory measures.

Other than Mr. Schmidt, only a company engineer, James Liang, has been sentenced in the United States in the matter, receiving a 40-month term in August after pleading guilty to conspiring to defraud the government and violating the Clean Air Act.

Another figure in the American investigation, Zaccheo Pamio, an executive in the company’s Audi division, was arrested in Germany in July. As an Italian citizen, he faces possible extradition — unlike five other executives indicted in the United States, all Germans based in their home country.